Please to refer to my post of Dec 13,
Let us classify some of the sharemarket
1. Those who suffer from " Investors'
shock syndrome ".
These are people who cannot bear the -often
sudden- losses incurred. It is akin to a form of depression.
Large losses can have a severe impact.
Examples: the 1987 and the dot com crashes.
Some will return to the sharemarket albeit with
less confidence than shown before: a crash can present an opportunity
to retrieve some of their losses.
Others will deposit their income at the banks
- who loves them -or stick to real estate.
who have the " Greed syndrome ".
2.1 The investor selects one
company from a set of well performing entities and puts virtually all
his cash in this stock.
By not splitting his risk he may double his
money or go broke and not have the money to win the next battle.
There are many examples where 'dead
certainties' have gone wrong:
Salmond Smith Biolab closed down because the
Chinese suddenly cut off their paua imports. Warehouses have burned
down; dishonesty or disasters have bankrupted companies.
2.2 People with inside information. Yes, we envy
the Hoggards and others who can't go wrong ! They will
have high returns on their investment!!
2.3 Some analysts / brokers who mislead the
market and benefit from doing so: they actively encouraged
and misled the
' tech. stock ' investors: refer to my
post of Dec 31, 2000.
3. Those suffering from the "
Following the herd syndrome ".
Most of us have this ailment from time to
time. It is an easy way of making a decision and we can always blame somebody
else if investments 'go belly up' !
If analysts and / or brokers suffer from this
disease and act in tandem, then a market crash can be an
4. Persons inflicted with the "
Invincibility syndrome ". Most of us have suffered from
this problem at some stage !!
At the apex of some investment cycles, investors
become overconfident; they think that they are infallible and praise their
There is a feeding frenzy and prices keep rising
regardless of stock valuations!
There are plenty of parties and the champagne is
flowing freely. Participants loudly praise their selections.
Others think that a crash will not yet
occur and if it ever did, then someone else will be left holding the
A painful market crash will cure this
5. The " Willi-nilly
This person considers the market to be a
lottery but would blame the advisor or his friend if the investment turns
They don't understand the market but think they do.
This dreaded disease cannot be cured!
6. Those who don't recognize a
potential gravy train and nothing will convince them to board
However, we deal with competing
investments and we shall have this problem from time to
7. The diligent investors who try
to learn about the variables affecting investments, eg. interest rates, the
They study the various types of investments, the
companies, the weighting of an investment, the potential risk / reward
levels and other desirable features, eg. timing.
Many 'sharechat' contributors do just
that and manage to stay afloat!
8. Persons with the X FACTOR :
One of our most successful investors:
Mr W. Buffett !!!
These are our opinions,